Republic of the Philippines

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City, Philippines

CIRCULAR

No.: 2012-004
Date: NOV 2 B 2012

TO All Heads of National Government Departments, Bureaus, and Agencies;

Provincial Governors, City/Municipal Mayors; Managing Heads of
Government-owned and/or Controlled Corporations; Al1 Treasurers,
Finance Officers, Regular and Special Disbursing Officers, and Other
Accountable Officials of the aforesaid Government Agencies; COA
Directors, Regional Directors, and Heads of Auditing Units; and All
Others Concerned.

SUBJECT: Demand for hnmediate Liquidation and Settlement of All Cash Advances
Outstanding as of December 31,2011

1.0 Rationale

Under existing regulations, cash advances must, as a rule, be liquidated within the
prescribed periods depending upon the nature and purpose of the cash advance (e.g.,
for salaries and wages; petty and field operating expenses; local travel and foreign
travel). Included among operating expenses are cash advances for the payment of
honoraria and similar payments to officials and employees; operating expenditures for
special projects and activities like anniversary celebration; and special purpose and
time bound activity like cultural and athletic activities. These must be liquidated
within twenty (20) days from accomplishment of the purpose.

2.0 Settlement and Liquidation of Cash Advance

A cash advance is settled and liquidated either by returning the money advanced if
unspent, or by the presentation of regularly accomplished vouchers, giving
satisfact01y detail of the items thereon paid which must be in accordance with the
purpose for which the cash advance was granted, and further supported by proper
receipts and other evidence of payment, subject to the result of the post-audit thereof
by the auditor concerned.

3.0 Primary responsibility of Heads of Agencies

Under Section 2 of Presidential Decree (P.O.) No. 1445, the Government Auditing
Code of the Philippines places the responsibility to faithfully take care that

1
 government funds and property be safeguarded from wastage directly with and
primarily on the chief or head of the government agency concerned.

4.0 Outstanding amounts of cash advances in government

Audit, however, reveals that unliquidated cash advances in government have reached
a staggering sum in the aggregate, and despite repeated demands and requests for
liquidation, the advances have remained unliquidated.

5.0 Legal presumption against non-liquidation of cash advance

Article 217 of the Revised Penal Code states in unequivocal terms that: "The failure
of a public officer to have duly forthcoming any public funds or property with which
he is chargeable, upon demand by any duly authorized officer, shall be prima facie
evidence that he has put such missing funds or property to personal use."

6.0 Final demand to settle unliquidated cash advance

Wherefore, final notice and demand is hereby made to all concerned to settle and
I iquidate all outstanding cash advances as of December 31, 2011 on or before January
31, 2013. Provided, however, that those who have been issued by the Commission on
Audit notice and demand, prior to the issuance of this Circular, to settle and liquidate
their cash advances within a specified period, shall do so within the period specified
in the said notice.

For purposes of this Circular, an accountable public officer refers to a public officer
or employee who, in the discharge of his office, receives money from the government
which he is bound lo later account for. Transfer, separation or retirement from the
government does not operate to discharge the said person from coverage of the
definition and corresponding duty to account for the unliquidated advances.

This Circular shall serve as the demand required under appropriate law, rules and
regulations to settle the accountable officer's unliquidated cash advance as well as all
those who are already separated from the service or have transferred to other agency.

7.0 Duty of Agency officials

On or before December 15, 2012, all heads of government agencies shall disseminate
in writing this Circular to all accountable officials and employees within their
respective agencies and serve a written notice to and demand settlement of the
outstanding cash advances as of December 31, 2011.

The Chief Accountant shall, within the same period, furnish the head of agency and
the head of the auditing unit thereat a list of accountable officers with unliquidated
and outstanding cash advances.

8.0 Duty orthe Commission on Audit

It shall be the duty or the head of the auditing unit/Audit Team Leader in the agency
to ensure that the outstanding cash advances are liquidated within the periods

2
 specified above. In addition, he shall evaluate the cash advances of accountable
ofif cers to determine compliance with the requirements of pertinent COA rules and
regulations and to report violations thereof.

Moreover, the auditors concerned shall report on or before February 28, 2013 to the
agency head and to the Director, Fraud Audit and Investigation Office, this
Commission, compliance with this Circular including an aging of the cash advance
balances of accountable officers in such form showing the purpose of the cash
advance and other information required.

The Auditors shall submit to their respective Directors the vouchers and all supporting
documents relative to the grant of the unliquidated cash advances copy furnished the
Oftice of the Chairperson, this Commission.

9.0 Consequences of failure to liquidate

9.1 Failure of an accountable officer to liquidate his outstanding cash

advance on or before January 31, 2013 shall constitute cause for the
Jiling of malvers ation charge under Article 217, failure to liquidate
cash advance under Article 218, both of the Revised Penal Code or
criminal prosecution under Section 128 of P.O. No. 1445.

9.2 The suspen si on of salaries of e1Ting accountable officers shall be

ordered by the auditor concerned to the proper agency official through
the head ofthe Agency.

9.3 Appropriate administrative proceedings shall likewise be instituted.

I 0.0 Monitoring Compliance

The Assistant Commissioners concerned shall monitor compliance by the auditor

under their jurisdiction.

I I .0 Effectivity

This Circular shall take effect immediately. All previous issuances by this
Commission inconsistent herewith are deemed amended or modified accordingly.

Quezon City, Philippines.

MA. GRACI
c
.1.4fu"
ta �fe�� �
i
LIDO TAN
n

�
�
('\
�l:
NDOZA
oner